27-Sep-11 World View – European Leaders Float A Fantasy Bailout Plan

This morning’s key headlines from GenerationalDynamics.com.

* European leaders float a fantasy bailout plan

* New home sales hit new bottom

* U.N. Security Council considers Palestinian state application

European leaders float a fantasy bailout plan

Members of the ‘we won’t pay’ movement in Athens burn their tax bills (AFP)

As we reported yesterday, the four-day meeting of International Monetary Fund (IMF) accomplished nothing. But in an effort to help “restore confidence” to the markets, European leaders are leaking a humongous bailout plan, with two major components: (1) Greece will default, and bondholders will take a 50% “haircut”; (2) Eurozone countries will contribute another €2 trillion ($2.8 trillion) to EU bailout fund (the European Financial Stability Facility, or EFSF). This plan cannot be implemented unless all 17 euro countries agree to it. Globe and Mail

The Greeks oppose the plan because they refuse to agree to a default. Kathimerini

Britain will oppose the plan because it would cost every British household 5,000 ($7,900). Daily Mail

Germany is bitterly divided over any further bailout proposal, with Jens Weidmann, new president of the Bundesbank (Germany’s central bank) opposed to even existing bailout programs. Spiegel

New home sales hit new bottom

This year is shaping up to be the worst year on record for new home sales. New home sales in August were down 2.3% compared to July, despite the fact that prices fell a steep 9% in August. Analysts have been predicting a housing recovery “next quarter” every quarter for the last four years. From the point of view of Generational Dynamics, a housing recovery cannot be expected until the 2020s. LA Times

U.N. Security Council considers Palestinian state application

The United Nations Security Council met for one hour in closed session on Monday to take up the Palestinian application for full U.N. membership. They issued a statement that the question will be referred to the “standing committee on admissions” to the U.N. The committee will review the the application and decide whether Palestine meets the criteria for statehood, including having a defined territory and a recognized government. Under the U.N. Charter, a new member must also be “peace-loving.” The committee will review the application for several weeks, and make a recommendation back to the Security Council. VOA